Severn Trent drained of £19m trying to avoid takeover

Water giant spent £19m on lawyers to rebuff three takeover approaches

Severn Trent today admitted it spent £19 million on lawyers and advisers when it rebuffed three takeover approaches, ultimately worth £5.1 billion, from a Canadian-led consortium.

When the FTSE 100 water firm saw LongRiver make its first approach in May, some in the City described it as “the return of M&A boom times”.

And while the deal didn’t come off, the advisers still raked in huge fees. Trent, which brought Citi, Barclays, Morgan Stanley and Rothschild on board for banking advice, plus lawyers from City giant Herbert Smith and spinners from PR firm Tulchan, said it “incurred costs for advisory, legal and other services  of approximately £19 million  in aggregate”.

Yet Michael Rolland, chief executive of Borealis, the Canadian infrastructure company that led the consortium, last month claimed that there had not even been much dialogue between the two parties.

“Since we submitted our [initial] proposal on 14 May 2013, no member of the consortium or its advisers has met any of the directors of Severn Trent or its advisers, despite repeated requests,” he said.

The consortium — also made up of a Kuwaiti sovereign wealth fund and UK pension fund the Universities Superannuation Scheme — abandoned its buyout plans last month after the utility spurned multiple approaches. Trent’s board claimed the bid, worth £5.1 billion, “failed to value the attractions of Severn Trent’s rare combination of yield, inflation-linked business model and potential”. Shareholders were set to ask questions of Severn Trent’s board at today’s annual meeting in Birmingham.

Elsewhere, the utility had good news for heatwave-riding Britons, as it said average consumption actually fell between the start of April and yesterday — and made no reference to a hosepipe ban. The wet winter means reservoirs are fairly full.

Severn Trent added that its forecast bad debt level is still at around 2.2 per cent of turnover for the full year but it is “continuing to monitor developments such as unemployment levels and changes to the UK benefits system closely” to see if customers will face more struggles paying bills.

Customer prices rose by 2 per cent from 1 April, reflecting November’s 3 per cent inflation, which is used as a yardstick in the regulated industry.

The shares ticked up 0.6p to 1746.6p — well below both the 2090p seen in the days after the bidding interest emerged, and the highest LongRiver bid of 2190p a share.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Recruitment Genius: Evening Administrator

£8 per hour: Recruitment Genius: This Pension Specialist was established early...

Guru Careers: Executive Assistant / PA

£30 - 35k + Bonus & Benefits: Guru Careers: We are seeking an Executive Assist...

Ashdown Group: Graduate Application Support Analyst

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Day In a Page

Homeless Veterans campaign: Donations hit record-breaking £1m target after £300,000 gift from Lloyds Bank

Homeless Veterans campaign

Donations hit record-breaking £1m target after huge gift from Lloyds Bank
Flight MH370 a year on: Lost without a trace – but the search goes on

Lost without a trace

But, a year on, the search continues for Flight MH370
Germany's spymasters left red-faced after thieves break into brand new secret service HQ and steal taps

Germany's spy HQ springs a leak

Thieves break into new €1.5bn complex... to steal taps
International Women's Day 2015: Celebrating the whirlwind wit of Simone de Beauvoir

Whirlwind wit of Simone de Beauvoir

Simone de Beauvoir's seminal feminist polemic, 'The Second Sex', has been published in short-form for International Women's Day
Mark Zuckerberg’s hiring policy might suit him – but it wouldn’t work for me

Mark Zuckerberg’s hiring policy might suit him – but it wouldn’t work for me

Why would I want to employ someone I’d be happy to have as my boss, asks Simon Kelner
Confessions of a planespotter: With three Britons under arrest in the UAE, the perils have never been more apparent

Confessions of a planespotter

With three Britons under arrest in the UAE, the perils have never been more apparent. Sam Masters explains the appeal
Russia's gulag museum 'makes no mention' of Stalin's atrocities

Russia's gulag museum

Ministry of Culture-run site 'makes no mention' of Stalin's atrocities
The big fresh food con: Alarming truth behind the chocolate muffin that won't decay

The big fresh food con

Joanna Blythman reveals the alarming truth behind the chocolate muffin that won't decay
Virginia Ironside was my landlady: What is it like to live with an agony aunt on call 24/7?

Virginia Ironside was my landlady

Tim Willis reveals what it's like to live with an agony aunt on call 24/7
Paris Fashion Week 2015: The wit and wisdom of Manish Arora's exercise in high camp

Paris Fashion Week 2015

The wit and wisdom of Manish Arora's exercise in high camp
8 best workout DVDs

8 best workout DVDs

If your 'New Year new you' regime hasn’t lasted beyond February, why not try working out from home?
Paul Scholes column: I don't believe Jonny Evans was spitting at Papiss Cissé. It was a reflex. But what the Newcastle striker did next was horrible

Paul Scholes column

I don't believe Evans was spitting at Cissé. It was a reflex. But what the Newcastle striker did next was horrible
Miguel Layun interview: From the Azteca to Vicarage Road with a million followers

From the Azteca to Vicarage Road with a million followers

Miguel Layun is a star in Mexico where he was criticised for leaving to join Watford. But he says he sees the bigger picture
Frank Warren column: Amir Khan ready to meet winner of Floyd Mayweather v Manny Pacquiao

Khan ready to meet winner of Mayweather v Pacquiao

The Bolton fighter is unlikely to take on Kell Brook with two superstar opponents on the horizon, says Frank Warren
War with Isis: Iraq's government fights to win back Tikrit from militants - but then what?

Baghdad fights to win back Tikrit from Isis – but then what?

Patrick Cockburn reports from Kirkuk on a conflict which sectarianism has made intractable